Buying land, no matter how big or small, is an exciting time. No matter what your plans are for this new purchase, there are incredibly important elements to consider. The most important part of this, aside from choosing the right land, is the matter of a possessory title. We will tell you everything you need to know about possessory titles in this article.
What Is a Possessory Title?
In the UK, land titles are granted by The Land Registry for properties. This could be anything from a small plot for gardening to huge estates. Each title has a unique title number and deeds that are stored electronically and paper copies held by the owner.
These title deeds provide an insight into the property, from the boundaries and any restrictive covenants. Most importantly, they state the name of who legally owns the property, when it was purchased and how much for.
These titles are available for anyone to access from The Land Registry and are an essential part of the buying and selling process. Without them, there can be a lot of barriers and risks involved.
Despite best efforts, not all properties have a unique title number and this is called a possessory title. Most properties built within the last few decades will have their titles stored at The Land Registry on digital files, so even if the seller has misplaced their deeds, they can still be obtained.
Older properties are less likely to have these available titles on a digital file. This is a common issue with properties that have not been sold for many years or stayed in the family. Other reasons could be the destruction of deeds in a fire or flood or they could even have been stolen.
Should I Buy a Property with a Possessory Title?
While the idea of buying a property with a possessory title may seem daunting at first, if the right steps are taken and your solicitor follows protocol, there is little reason you shouldn’t.
The seller will still need to prove they have legal ownership of the property. Don’t worry, this is the responsibility of their solicitor to check and your conveyancer will double-check this to ensure there is little risk to the transaction.
They have the legal responsibility to ‘let the beware’ if they are selling a property with a possessory title. This means they must inform you about the possessory title as soon as possible in the transaction. If they don’t, they could face drastic legal and financial penalties.
However, it is very rare to let it get to this stage, your solicitor is very unlikely to proceed with the transaction without title deeds or the declaration of a possessory title.
Can a Possessory Title Be Changed?
The answer is yes. When you buy a property with a possessory title, your conveyancer can then apply to register the title for you once you have completed the transaction.
Be aware that this is not an easy process and can take a long time. The Land Registry requires a lot of information that both the seller and the buyer will provide. Your solicitor will make sure this is ready for completion to get this sorted as soon as possible.
The application process can take anywhere from a few weeks to a few years. While you will still legally own the property, there are some restrictions you will be under until you have those new title deeds. Some of these include planning permission, so if you are wanting to make big changes to the land, speak to your solicitor first as you may be waiting a long time before you can do this.
But it isn’t just new owners who can apply for this, current owners can apply for title deeds even if they are not intending to sell the property.
Once the application has been processed by The Land Registry, a new title number and deeds will be issued and stored safely on their systems as well. This is known as an absolute title.
The Risks of Possessory Title
This is where it can all go wrong if the right steps haven’t been taken. When your application is submitted to The Land Registry, they are legally obliged to allow anyone to challenge your application if they believe they have any ownership over the property.
This is rare and even rarer for any of these applicants to be able to prove they have any right to the property. However, it has happened in the past.
This is why possessory title insurance is essential, this covers you should the worst happen. A possessory title indemnity will typically be paid for by the seller as well, but we are aware that they don’t have any legal obligation to do so.
The cost of this can be anywhere from £100 to £1000, depending on the value of the property, so always factor this into your buying budget, just in case.
So, overall there isn’t much to worry about when it comes to buying a possessory title. However possessory title insurance is an absolute must, you could lose your property and the money invested if you don’t take a policy out!